In 2016, the fine on interest averaging is deductible. This removes an important threshold for averaging. More about the penalty interest and tax deduction.
Reduce mortgage interest
Home owner can lower mortgage interest rates through interest rate averaging. The current rate of the customer is averaged with the current market rate. The penalty interest is then settled in the new lower rate.
These lenders offer interest-rate averaging
At present, only 7 of the 27 lenders in the Netherlands offer (under certain conditions) interest-rate averaging. These are: Sunflower Credit, Y Finance, Staff Credit, Phi Sy Bank, Daisy Bank, Westwoods Financing and Richloons mortgages. This is an eyesore for many homeowners and interest groups.
Clarity of tax rules removed
The main argument of the lenders not to offer interest-rate averaging is uncertainty about the tax rules. In September 2015, the State Secretary gave a proposal by means of a letter to the House to remove this lack of clarity. It is clear from this that through the 2015 Fiscal Collection Act, the thresholds for offering interest averaging will disappear by 2016.
Fine interest averaging tax deductible
It has been decided to consider the penalty interest (tax) as interest and not as costs. In this way, the penalty interest for homeowners, both in the case of a lump sum payment and spread over the term, is tax deductible. The State Secretary said that he ‘fully met the banks’.
So now it’s the banks’ turn. Which banks will offer interest-rate averaging in 2016?
Tax deduction for interest averaging
From December 8, 2015, the penalty interest on interest averaging is tax deductible. Because this is settled in the new mortgage interest, you can deduct the full interest rate from the tax. You can also deduct the one-off costs that you incur for interest averaging (advice and / or administration costs) in the income tax return.
Penalty interest deductible retroactively
If you applied interest averaging before 8 December 2015, the penalty interest can be deducted retroactively. With a so-called ‘automatic reduction’ you can still request to deduct the penalty interest already paid. View the latest dates by which your request must reach the Tax Authorities.
Alternative to reshuffle?
Interest rate averaging is often seen as an alternative to transfer. The costs are lower because no new mortgage is taken out. However, interest rate averaging does not always result in the highest savings. After all, the customer stays with his or her current bank, while other parties in the market may be cheaper. So always have both options charged by a mortgage adviser.